Beyond the fact that millions will gain more affordable coverage options in 2014, the availability of 90% federal funding for new or enhanced Medicaid eligibility systems is one of the most promising aspects of health reform. New systems offer so many advantages, and coupled with new requirements for electronic verification of eligibility, will transform the eligibility and enrollment experience as we know it. These systems must continue to meet federal requirements known as the “Seven Conditions and Standards” and, in doing so, qualify for a 75% federal match for ongoing operations and maintenance. And this is where the good news comes in. An FAQ released by CMS last week clarifies the types of costs that qualify for the higher match and there are some key items on that list that advocates and states will be happy to hear about.
The FAQ clarifies that the costs qualifying for the enhanced 75% match includes personnel costs, forms, hardware, maintenance of software, eligibility verification and computer operators when associated with actual eligibility determinations conducted on the systems. I immediately zeroed in on the personnel costs because it encompasses intake, eligibility determinations, ongoing case maintenance including renewals, and customer service! The FAQ, however, does articulate that certain staff activities need to be allocated between the enhanced and regular match. For example costs of call center staff must be proportioned based on how staff spends their time; time spent on eligibility and renewal activities qualifies for the 75% match, while education about benefits, plan choice and enrollment qualifies at the regular 50% administrative match.
The 75 percent reimbursement rate is available to states starting Oct. 1, 2013 when the initial open enrollment period is launched. The increased rate is available to states whether or not they participate in the Medicaid expansion and it does not expire, as long as states continue to meet federal operating standards.
Costs that cannot be specifically linked to the development or operation of a Medicaid eligibility determination system will be reimbursed at a rate of 50 percent. Such costs are usually indirect costs including the staff costs associated with agency-wide functions such as accounting, budgeting, and general administration.
This announcement is especially good news for state budgets. While states that will receive 100% match for individuals newly eligible for Medicaid, administrative costs continue to be shared between the state and federal government. However, in states that are building new systems (as almost all states are), the budget for eligibility staff and related costs will stretch much further, helping to offset the cost of boosting their eligibility administrative capacity to handle eligibility for increased enrollment. In fact, the state budget for eligibility-related work actually goes twice as far. Let’s do the math. Consider a state that spends $10 million on eligibility related activities. Currently, the state pays $5 million and the federal government matches it. That same $5 million in state funds can now draw down $15 million in federal match for a total $20 million, effectively doubling the eligibility-related administrative resources.
While I’m on the subject of technology, I can’t help but remind state partners of the importance of being a voice for consumers as states build their new systems over time. Last fall, Julie Silas of Consumers Union and I teamed up to create Eligibility and Enrollment Systems: An Advocates IT Toolkit” to highlight top consumer issues related to eligibility systems and offer suggestions on the right questions to ask your state. It’s not too late to engage with your state and it doesn’t have to be a daunting task if you use the toolkit as a guide. Many states are just getting their IT contracts in place and, given the late start, states will continue to build on the functionality of these systems well into 2014.
